Czech lower house backs plan for CO2 permits, some free

Date:27-Sep-12Country: CZECH REPUBLICAuthor: Jan Lopatka

The Czech parliament's lower house approved a law on Wednesday setting rules for the allocation of carbon allowances to companies in 2013-2020, using an exception from full auctioning negotiated by some EU countries to protect their industries.

The bill could however be delayed by the possible veto of President Vaclav Klaus, a long-term critic of climate change research and efforts to resist global warming.

Most European Union states must auction permits to emit carbon dioxide - blamed for contributing to climate change - from 2013, but the rules have been eased for eastern countries which depend heavily on high-emission coal-burning power plants.

That will allow the Czechs to continue awarding some allowances to electricity producers at a gradually decreasing rate - from 70 percent in 2013 to zero in 2020. Other sectors will also see a gradually falling amount of freely-distributed permits.

Under the new law, the Czech Republic will grant electricity producers 107.67 million allowances for free between 2013 and 2020, the second highest amount after Poland with 404.7 million. One permit equals to one tonne of carbon dioxide.

In total, the Czech Republic will grant 645 million permits in that period, of which 342 million will be auctioned and 303 million given out for free, according to documents accompanying the legislation in parliament.

The main receiver in the Czech Republic is electricity producer CEZ.

The bill will next be debated by the upper house of parliament and will then need to be signed into law by Klaus.

The president has in the past months frequently rejected government legislation, weakening the centre-right cabinet, and may veto the law when it reaches his office.

The lower house can override the veto, however, given that the bill won support from both government and opposition parties in Wednesday's vote.